What Is an Income Tax Deduction?

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Deductions can be made to income taxes for children under 18, interest paid to someone, mortgage payments, business travel expenses and asset depreciation. Be aware that lots of tax deductions may trigger an audit with information from a financial consultant in this free video on money management and personal finance.

Part of the Video Series: Money Management & Personal Finance
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Video Transcript

Have you prepared your taxes for this year? Remember, have you looked in the boxes down there that says "deduction"? I'm Roger Groh of Groh Asset Management, and today, we're here to talk about what is a deduction from your income tax? Well, there are all sorts of things that the government has given you the ability to deduct. If you have children under the age of 18, you can deduct a portion of their expense. If you've paid interest to somebody, you may have the ability to deduct that. If you have traveled for business, you may have the ability to deduct that. If you have a mortgage, you may have the ability to deduct a portion of that mortgage. If you have depreciation from an asset that you've purchased, you may have the ability to deduct that. I say may because the legal right to do so may differ significantly, depending upon the country that you're in. Be very careful as you start to do this. One other note to consider: Yes, you may have the legal right and the right under the tax code to use all of the deductions that you are eligible for. In many cases, though, that will trigger an audit and it may very well be that the cost of the audit, both in dollars and emotional, might be greater than whatever money you saved using the deductions. So be very careful and think through the implications of any income tax deduction that you take. Hope that helps. I'm Roger Groh at Groh Asset, and thank you very much for spending time with me.

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